Former Business Council of Australia president Tony Shepherd is behind a bold $2.4 billion bid for control of GrainCorp which comes just as the agriculture giant was considering its own acquisitions.
GrainCorp, the dominant force in east coast grain handling, has received a non-binding, indicative proposal from Long-Term Asset Partners Pty Ltd (LTAP) that value its stock at $10.42 a share.
LTAP, whose directors are Mr Shepherd, Lance Hockridge, Andrea Staines and Chris Craddock, says it is a newly formed asset manager for a trust whose beneficiaries are Australian investors.
It also says the structure has been established to make long-term investments and that it does not intend to sell any of the assets of GrainCorp should the scheme of arrangement proposal for 100 per cent of GrainCorp succeed.
The GrainCorp board will engage with LTAP in the context of its own advanced portfolio review that is understood to include a bid for Cargill’s malting business as well of the sale of some of assets and a change in ownership structure.
GrainCorp said the LTAP proposal was subject to a number of conditions and involved a complex financing structure with significant leverage comprising $3.2 billion in acquisition facilities from Goldman Sachs and $400 million from Westbourne Capital.
The board said it needed more information on the identity of the equity investors underpinning the LTAP proposal as well as the longer term financing plan and intentions for the business.
LTAP is a new entity and this would be its initial investment.
GrainCorp’s board said it had not formed a view on whether the price offered under the LTAP proposal is at a level which it is prepared to recommend to shareholders in the context of a change of control.
The GrainCorp shares were trading at $7.30 on Friday as the company suffers through one of the worst harvest in decades on the east coast of Australia where it controls a vast storage and handling network and port facilities.
The offer comes five years after then treasurer Joe Hockey killed off a bid for GrainCorp from US-based Archer Daniels Midland on national interest grounds.